It’s early days for the 2022 housing market, but new data shows home buyers are already off to the real estate races. In the first month of the year, the typical home sold faster than in any prior January, according to the Realtor.com Monthly Housing Report released today.
Compared to January’s national pace, homes sold even more quickly in the 50 largest metros, with listings flying off the market in 36 days or less in Nashville, San Diego, San Jose, California, Denver and Raleigh, North Carolina.
“We’re forecasting a whirlwind year ahead for buyers and, if January housing trends are any indication, 2022 competition is already heating up,” said Realtor.com chief economist Danielle Hale. “Homes sold at a record-fast January pace, suggesting that buyers are more active than usual for this time of year. But it’s a different story on the other side of the closing table, with new seller listings continuing to decline in January. Factors like Omicron uncertainties could be causing sellers to hesitate even when they know housing conditions are favorable.”
Hale added ,“Another key barrier is the inventory ‘chicken-and-egg’ dilemma that may vex sellers who are also buying: do you list now when home shoppers are hungry for more options, or do you wait for more inventory to hit the market in the spring?” “Ultimately, only you know the best time for your family to make a move, but preparation is key to acting quickly when the right opportunity comes along.”
Reflecting the mixed impact of 2021’s pent-up buyer demand and feverish home sales pace, time on market both hit a new record and offered buyers a first glimmer of relief in January. On one hand, the typical home spent less time on the market than in any prior January and a full month less than in the pre-pandemic period from 2017-2019 alone. At the same time, with recent trends following typical seasonal patterns, national time on market increased in January over the final month of 2021.
The typical home spent 61 days on the market in January, moderating from the December pace (54 days). However, homes spent less time on the market than in January 2021 (-10 days) and compared to the same month in 2017-2020, on average (-29 days).
Homes spent less time on the market than the national rate in the 50 largest U.S. metros, at an average of 52 days in January. Southern metros posted the biggest yearly declines in time on market, down 10 days across the region as a whole and led by Miami (-29 days), Orlando, Fla. (-24 days), and Raleigh, N.C. (-17 days).
- In January, time on market increased over last year in just four large markets: Hartford, Conn. (+10 days), Minneapolis (+2 days), and Richmond, Virginia (+1 day) and Washington, D.C. (+1 day).
Limited inventory creates challenges for buyers and prospective sellers alike
While buyer activity is accelerating earlier in 2022 than in prior years, January data suggests sellers aren’t on the same timeline. The yearly decline in inventory grew for the fourth straight month as new listings continued to fall short of prior years’ levels. This is partly due to typical seasonality, as sellers have historically waited until closer to the spring to enter the market. However, January’s new listings declines could indicate that some prospective sellers are delaying their original plans to list earlier in the year, as 65% of those surveyed in the fall expected to list by March 2022.
A number of potential factors may be behind seller hesitation, from Omicron uncertainties to the decade-long new construction shortage, with the many sellers who also need to buy a next home finding limited options in January.
- Nationally, the inventory of active listings was down 28.4% year-over-year in January, worsening from last month’s rate (-26.8%). Although there were fewer for-sale homes than in January 2020 in all of the 50 largest metros, more than half (26) posted smaller inventory declines than the national rate.
- New listings lagged behind prior year’s levels for the second consecutive month in January, down 9.1% nationwide. However, the annual rate of new listings declines improved steadily over the course of the month. If this trend continues, buyers may start to see more options ahead of the competitive spring season.
- Among the 50 largest metros, 19 experienced smaller new seller declines than the national rate in January. Additionally, four markets posted annual new listings gains: Cleveland (+7.6%); Indianapolis (+1.6%), Houston (+0.9%) and Orlando, Florida (+2.3%).
Home price growth continues at a double-digit pace as rate hikes fuel competition
As demand further outpaced supply in January, the median listing price held near record-highs and continued to rise at a double-digit annual pace. While 2022 is forecasted to be a seller’s market, annual home price growth is expected to moderate from the 2021 pace. This is partly due to looming rate hikes, which will cut into buyers’ ability to meet high asking prices and have already begun to rise more quickly than anticipated.
Listing price data is already showing some loss of momentum, as the acceleration was smaller in January over December compared to December over November. Still, the affordability of monthly housing costs will increasingly challenge buyers – especially first-timers, who typically have less flexible budgets and face the added financial burden of skyrocketing rents.
For the second month in a row, the median listing price held at $375,000. Listing prices increased at a slightly faster annual pace in January (+10.3%) than in December (+10.0%), but the change was smaller than from November (+8.6%) to December.
Relative to the national rate, home prices posted smaller yearly gains (+6.1%) in the 50 largest metros, partially due to inventory gains in smaller-sized homes. Price growth was similar on a square foot basis, up 11.8% year-over-year in large metros and 13.5% year-over-year nationwide.
Listing prices grew at a double-digit annual pace in the southern (+11.2%) and western (+10.0%) regions, which dominated the top five list of markets with the biggest annual home price increases: Las Vegas (+35.3%), Tampa (+28.7%), Austin, Texas (+28.2%), Orlando (+25.0%) and Miami (+24.8%).
For the first time since the onset of the pandemic, national overall delinquency dropped below the March 2020 level of 3.6%, a sign that mortgage performance is following the nation’s income growth, according to CoreLogic, an analytics and data provider. At the same time, foreclosure rates remain at historic lows as borrowers have been able to lean into the equity generated by a year of record-breaking home price growth. These factors combined have helped borrowers weather the lasting economic impacts brought on by the pandemic and avoid falling behind on payments or losing their homes.
“Nonfarm employment rose 6.45 million during 2021, helping to rebuild income for families under financial stress during the pandemic,” said Frank Nothaft, chief economist at CoreLogic. “Income growth has helped to reduce past-due rates and home equity build-up has reduced the likelihood of a distressed sale for families that experience financial challenges.”